E.l.f. Beauty Shares Drop After Sales Disappoint
E.l.f. Beauty experienced a 14% growth in its latest quarter, driven largely by strong demand for the Rhode brand. However, shares fell as much as 29% after the company issued a sales forecast below expectations.
Rhode’s Contribution and Company Growth
This was E.l.f. Beauty’s first earnings report following its acquisition of Rhode, a brand founded by Hailey Bieber. The company projected that Rhode would grow by 40% in 2025 and contribute $200 million in sales within the current fiscal year.
Despite Rhode’s strong performance, growth in other areas of E.l.f. Beauty slowed down. The company’s second-quarter sales missed expectations, and the full-year growth forecast of 18 to 20% aimed for $1.57 billion in sales, falling short of the $1.65 billion average analyst estimate. This caused shares to plunge in after-hours trading.
Sales Figures and Launch Success
- Overall sales in Q2 increased 14% to $344 million.
- Rhode’s launch at Sephora on September 4 was “by far the biggest launch Sephora North America has ever seen,” according to E.l.f. Beauty CEO Tarang Amin, more than doubling previous launch sales.
- Research from TD Cowen noted Rhode made $15 million in sales in its first two days at Sephora.
- Before this Sephora launch, SEC filings showed Rhode reached $40 million in quarterly sales through June 30, indicating a slowdown for the brand.
- The company forecasts Rhode will grow 40% to $300 million in calendar year sales.
"Rhode’s Sephora launch on Sept. 4 was by far the biggest launch Sephora North America has ever seen," said Tarang Amin, CEO of E.l.f. Beauty.
E.l.f. Beauty faces the challenge of balancing the fast pace of Rhode’s growth with overall company sales expectations in the coming year.
Summary: Despite Rhode’s strong sales launch, E.l.f. Beauty’s shares fell sharply due to slower overall growth and a cautious sales forecast that missed market expectations.